Caterpillar’s mining sales are down 33 percent annually, or $5.4 billion. And a new report from Forbes, put together by stock price estimate firm Trefis, says Caterpillar’s mining woes will likely continue at least into early 2014.
The deceased demand has had a big impact. For the first nine months of the year, the company’s sales fell by 17 percent or $8.5 billion. Third quarter sales and revenues fell $3.1 billion year-over-year to $13.4 billion while profits plummeted 44 percent to $946 million.
The company, taken off guard by just how severe the decrease in demand has been in the last year, was quick to respond by cutting costs. The company has announced the closings of three U.S. plants this year and has reduced its global workforce by 13,000 jobs.
And though the global economy is expected to grow in 2014, Trefis expects mining demand to remain soft through the early part of the year. Caterpillar, expecting continued difficulty in the segment has forecast flat sales in 2014 with mining sales offsetting growth in construction equipment.
Trefis has made a $88.43 stock price estimate for Caterpillar, which is below the company’s current stock price.
Caterpillar dealers are still cutting their inventories due to lack of end user demand and, according to Trefis, at a recent conference the company indicated that dealer inventory reductions could continue through early 2014.